Greece says high surplus forecasts mean pension cuts, tax hikes not needed

Greece says high surplus forecasts mean pension cuts, tax hikes not needed

Greece does not think it needs to cut pensions next year or increase tax on earnings scheduled for 2020 because it expects to exceed budget surplus targets set under a post-bailout adjustment program, Prime Minister Alexis Tsipras said on Sunday.

Greece legislated the measures to convince its lenders that it would stay on the path of fiscal consolidation in the post-bailout period.

Tsipras told a news conference in Thessaloniki the country would submit its economic projections to the European Commission in mid-October where it would support the view the pension cuts would be unnecessary.

Within those calculations, he said, authorities expected to “far exceed” a 3.5 percent primary budget surplus for next year, a level which would allow Athens to shelve plans for further pension cuts.

The same rationale applied for 2020, when a decrease in the tax-free threshold on earnings was due to take effect, he said.

Asked about market access, he said Greece has a multi billion euro safety cushion which can ensure the country does not need to tap financial markets for liquidity during periods of volatility.

Tsipras said the country had a cash buffer of close to 30 billion euros, enough, he said, for the country to be self-sufficient for 2.5 years. The country emerged from a financial support mechanism sponsored by its EU partners last month. [Reuters]

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